New Delhi [India], August 27 (ANI): Personal income tax collections in India have overtaken corporate tax revenues for the first time, marking a structural shift in the country’s direct tax framework, according to a report by JM Financial Institutional Securities. The change reflects growing formalisation, digitisation, and stronger compliance measures.
The share of personal income tax in total direct taxes rose sharply from 38.1% in FY14 to 53.4% in FY24, while corporate taxes fell from 61.9% to 46.6% over the same period.
India’s direct tax compliance has expanded significantly over the past decade. The number of individual income tax return filers surged 2.3 times, from 30.5 million in FY14 to 69.7 million in FY23. Including taxpayers who pay through TDS without filing returns, the base nearly doubled from 53.8 million to 99.2 million.
This growth has been supported by robust upfront compliance. Tax Deducted at Source (TDS) collections more than doubled from Rs 2.5 trillion in FY14 to Rs 6.5 trillion in FY24, while advance tax payments nearly quadrupled from Rs 2.9 trillion to Rs 12.8 trillion. TDS and advance tax payments now account for over half of total direct taxes.
The introduction of the Goods and Services Tax (GST) in 2017 further strengthened compliance through invoice-matching and data integration. The number of active GST taxpayers rose from 12.4 million in 2019 to 14.7 million in 2024, formalising many previously unregistered businesses. This digital trail has enabled authorities to cross-verify income declarations and curb tax evasion.
Personal income tax collections have also been boosted by rising declared salaries, which increased from Rs 9.8 trillion in FY14 to Rs 35.2 trillion in FY23, representing a 15% CAGR. Over the same period, personal tax collections grew from Rs 2.4 trillion to Rs 8.3 trillion.
The direct tax-to-GDP ratio improved from 3.2% in FY01 to 6.6% in FY24, although only 6.9% of India’s population pays income tax, compared with nearly 50% in developed economies. (ANI)
About The Author
